India: Bankers expect the RBI to maintain status quo on rates at the monetary policy

2014/05/29

Bankers expect the Reserve Bank of India (RBI) to maintain status quo on rates at the monetary policy review on Tuesday as retail inflation is yet to show signs of slowing down. The RBI has been tracking consumer price inflation closely and, according to the report of a committee headed by deputy governor Urjit Patel, it is targeting to bring consumer price index (CPI) inflation down to 8% by the end of January 2015 and 6% by January 2016.

Bankers point out that since the CPI hit a three-month high in April, RBI is likely to keep policy rates on hold. “Except for the sentiment, nothing has changed yet and, so, we think RBI will not opt for changes in policy rates,” said RK Dubey, chairman & managing director, Canara Bank.

Retail inflation hit a high of 11.16% in November last year and stood at 8.59% in April, driven by higher food prices.

“The market is not expecting any change in policy rates and the April CPI data is the main reason,” said Arun Kaul, chairman & managing director, UCO Bank.

In the April policy, RBI had said that

there are risks to the central forecast of

8% CPI inflation by January 2015 due to a less-than-normal monsoon.

“The Reserve Bank of India has reiterated that inflation control was a priority and the bank will also attempt to balance growth-inflation objectives. We look for the repo to be left unchanged next week,” DBS Bank India said in a note. RBI governor Raghuram Rajan has raised the key repo rate thrice since taking over the reins of the apex bank in September, 2013. In January, the repo rate hike was seen as a surprise move as the market was expecting a pause.

“We note that the RBI is unlikely to cut policy rates in FY 2015, given high CPI inflation through FY15,” a recent report by Kotak Institutional Securities said. However, in April, RBI had kept the rates on hold and indicated that RBI will keep rates steady in the near term if inflation eases towards its targeted level. “I do not expect change in rates from RBI as inflation is still not at its comfort level,” said MS Raghavan, chairman & managing director, IDBI Bank.

Foreign brokerage Barclays expects that going forward inflation could moderate, which should lead to easing of interest rate by the central bank. “With favourable government policies, we expect an improvement in sentiment that could lead to the beginning of the next growth cycle in India,” Barclays said in a note last week.

2015/01/20
Low oil prices will not provide a sufficient updraught to dispel the clouds hanging over the world economy, the International Monetary Fund said on Tuesday.
In a sign of its increasing gloom about the medium term economic outlook, the IMF cut its world economic increase forecasts by 0.3 % points for both 2015 and 2016, despite believing cheaper oil represents a “shot in the arm”.

2015/01/20
The richest 1 % are likely to control additional than half of the globe’s total wealth by next year, the charity Oxfam reported in a study released on Monday. The warning about deepening world inequality comes just as the world’s business elite prepare to meet this week at the annual World Economic Forum in Davos, Switzerland.
The 80 wealthiest people in the world all own $1.9 trillion, the statement found, nearly the same all shared by the 3.5 billion people who occupy the bottom half of the world’s gain scale. (Last year, it took 85 billionaires to equal that figure.) And the richest 1 % of the people, who number in the millions, control nearly half of the world’s total wealth, a share that is as well increasing.

2015/01/16
A Memorandum of Considerate (MoU) will be signed by the Ministry of Business, Enterprise and Cooperatives and the Ministry of Agriculture of the Republic of India to enhance collaboration in the field of cooperatives.
The MoU will provide for cooperation in areas pertaining to the regulatory framework for cooperatives inclunding cooperative development policies and strategies.

2015/01/01
Indian consortium International Coal Ventures Pvt Ltd (ICVL) to date has shipped to India 70,000 tons of coal mined in Mozambique, which was destined for the Steel Authority of India (SAIL), said a source from the consortium.
Quoted by daily newspaper The Hindu, the source as well said two shipments had been made in three months and from January 2015 the company would start to make a shipment per month of coal mined in Benga, in Mozambique’s Tete province.

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